HomeMy WebLinkAbout2014-1006 Study Session PACKET
CITY OF
ASHLAND
CITY COUNCIL STUDY SESSION
AGENDA
Monday, October 6, 2014
Siskiyou Room, 51 Winburn Way
5: 30 p.m. Study Session
1. Public Input (15 minutes maximum)
2. Look Ahead review
3. AFN Business Plan Presentation and Discussion
Immediately following the Study Session the City Council will hold an Executive Session for
labor negotiation, pursuant to ORS 192.660(2)(d).
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this
meeting, please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735-
2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to
ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title 1).
COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEL 9. STARTING APRIL 15, 2014,
CHARTER CABLE WILL BROADCAST MEETINGS ON CHANNEL 180 OR 181.
VISIT THE CITY OF ASHLAND'S WEB SITE AT WWW.ASHLAND.OR.US
City of Ashland Council Meeting Look Ahead
*****THIS IS A DRAFT AND SUBJECT TO CHANGE*****
10120 Stud Session in Siski ou Room 10/20
1 Discussion regarding Bee City, USA proposal Dave K. Admin SS
2 Discussion regarding self insurance Tina/Dave K. HR Admin SS
10/21 Regular Council Meeting 10/21
3 Annual presentation from the Public Art Commission Ann Admin PRES
4 Presentation on TAP Mike PW PRES
5 Presentation on Code Compliance Bill CD PRES
6 A roval of application fora public art rant Ann Admin CONS
7 Review and approval of Downtown Projects RFPs Scott PW NEW
8 Recommendation from Tree Commission for replacement of tree CD NEW
on Plaza Bill
9 Approval of a resolution for the winter shelter Dave Admin NEW
10 Supplemental Budget Lee Finance NEW
11 Recycle Center ad hoc Committee recommendations to Council Admin NEW
Adam
12 Deer education proposal Dave Admin NEW
13 Resolution regarding disinvestment Barbara Recorder RES
11/3 Stud Session in Siski ou RooM 11/3
14 Communications evaluation Ann Admin SS
15 Discussion of Black Swan Dave Admin SS
11/4 Regular Council Meeting 1114
16 CAFR Lee Finance NEW
11/17 Stud Session in Siski ou Room 11/17
17 Discussion of workforce proposal Adam Admin SS
18 Draft Social Services Strategic Plan Bill CD SS
11/18 Regular Council Meeting 11/18
19 Annual presentation by Housing and Human Services CD PRES
Commission Bill
12/1 Stud Session/ in Siski ou Room 12/1
20 Discussion of OLCC liquor license renewals (Terry/Barbara) Police Recorder SS
21 Discussion of plaza master tannin Dave Admin SS
12/2 Regular Council Meeting 12/2
12/15 Stud Session in Siski ou Room 12/15
22 Approval of final Social Services Strategic Plan Bill CD NEW
12/16 Regular Council Meeting 12/16
23 Annual presentation b the Planning Commission Bill CD PRES
24 Annual appointment of Budget Committee and Audit Committee Recorder NEW
members (Barbara) I
1/5 Stud Session in Siski' ou Room 1/5
25 Discussion of pavement management strategy Mike PW SS
1/6 Regular Council Meeting 1/6
Page 1 of 2 10/1/2014
City of Ashland Council Meeting Look Ahead
*****THIS IS A DRAFT AND SUBJECT TO CHANGE*****
9 19 Stud Session in Siski ou Room 1119
1120 Regular Council Meeting 1/20
Commission Presentation Dates - 2014
February 18 - Transportation Commission
March 18 - Tree Commission
April 15 - Historic Commission
May 20 - FireWise Commission
June 3 - Band Board
July 15 - Forest Lands Commission
August 19 - Conservation Commission
September 16 - Airport Commission
October 21 - Public Arts Commission
November 18 - Housing and Human Services Commission
December 16 - Planning Commission
"Resolution declaring fountain surplus property
Page 2 of 2 10/1/2014
CITY OF
ASHLAND
Council Communication
October 6, 2014, Study Session
AFN Business Plan Presentation and Discussion
FROM:
Mark Holden, Director of Electric Utilities and Information Technology, holdenmkashland.or.us
SUMMARY
The Ashland Fiber Network Strategic Business Plan is presented for discussion. The plan provides for
AFN's long term direction and strategy. The plan was completed at the request of the City
Administrator.
AFN has struggled to create net revenue almost since its inception. That's largely because of the debt
that was incurred in order to build the system. Funds that would otherwise be spent on system and
service improvements instead are spent on debt service. In addition, AFN had no competition when it
was first launched and now operates in a highly competitive environment against multi-billion dollar
corporate conglomerates.
The business plan lays out in stark terms, the history, strengths, weaknesses and opportunities for
AFN, along with the alternative paths the City can pursue with regard to AFN's future.
BACKGROUND AND POLICY IMPLICATIONS:
The Ashland Fiber Network Strategic Business Plan (Plan) determines the direction, priorities and long
term viability of AFN. Detailed tactical plans, project plans and budgets will be guided and developed
as a result of implementing the strategic plan.
AFN is at a crossroads. Within the Plan, two alternative directions are presented. The first alternative
provides for the development of a new family of products based on optical fiber technology. The
second alternative does not include new products. Both alternatives suggest a new approach to the
market and a need for cost reductions. The cost reductions or other funding measures are needed in
order to fund the activities envisioned in the strategic plan.
The plan is a strategic document. After the presentation and the solicitation of feedback from the
Council, Staff will work to develop the necessary operational tactics.
As part of the Strategic Plan, two strategic projects are identified.
• FY2016: Increasing internet bandwidth - required to maintain/improve the current performance
of the network (key to customer satisfaction) and provide for additional new customers
• FY2017: Development of a new fiber based service - provides advanced services and a new
revenue stream
Page I of 2
~r,
CITY OF
ASHLAND
FISCAL IMPLICATIONS:
Fiscal implications include a proposal for adjusting internal charges, a capital expense of $250,000 in
fiscal year 2016, and $250,000 capital expense in FY2017. Both investments are in the next biennium
and will be brought forward through the budgeting process.
STAFF RECOMMENDATION AND REQUESTED ACTION:
Staff is soliciting input and discussion in a Study Session environment.
SUGGESTED MOTION:
N/A. This item is for discussion only.
ATTACHMENTS:
Ashland Fiber Network Strategic Business Plan, August 2014
Page 2 of 2
~r,
Ashland Fiber Network
Strategic Business Plan
August 2014
How
Ashland
Connects
City Of Ashland
Information Technology Department, Telecommunications Division
90 North Mountain
Ashland, OR 97520
Telephone: 541-552-2222
Fax: 541-552-2436
• Ensure long term fiscal viability
o Grow customer market share
o Reduce bandwidth and internal expenses
o Successfully deploy services
• Re-establish technological innovation leadership
o Deploy Google City Fiber-like enterprise services to local businesses
o Design, engineer, and implement a physically diverse bandwidth path to a Tier 1 point-
of-presence"
o Deploy competitive and reliable cable modem services to residents and small businesses
• Maximize the community value of the network through the continued evolution of the
infrastructure
o Enable new technologies
o Maintain service standards
o Provide community access when possible
Paae 6 of 43 Printari- (19/9R/9(114
Business
Operating in a competitive telecommunications environment, AFN is a "last mile""' supplier of
telecommunication services to the residential, commercial, governmental/educational, healthcare and
alternative telecommunications provider (Internet Service Provider and Competitive Local Exchange
Carrier - ISP/CLEC) market segments. AFN operates in and around the City of Ashland. Since
2001, AFN has developed and maintained a hybrid fiber coaxial network. The network enables AFN
to serve the market with both the active and passive services required: TV programming (partner),
Ethernet circuits, internet, dark fiber, collocation, and telephony (partners).
Market
AFN's target market is the telecommunications users in and around the City of Ashland. The
telecommunications market consists of five market segments: residential, commercial/industrial,
government/educational, healthcare and alternative telecommunication providers (ISP/CLEC).
While based on similar technologies, the commercial/industrial, health care, and ISP/CLEC market
segments require or value customized features. The largest market segment is residential. The
residential market is a commodity market.
Industry
The telecommunications industry has both mature commoditized components as well as high growth
components. While fixed rate services such as TV and telephony are mature and have become
commodities, other services such as internet, Ethernet and collocation continue to expand in both
purpose and volume of use. The industry is driven by new and growing technologies. The influence
of these technologies has opened the need for networks capable of supporting such technologies as
Cloud Services` IPTV/OTT" and Information and Communications Technology (ICT"'). These
technologies continue to pressure existing networks for both performance and reliability. AFN is
focused on the delivery of the current and emerging technologies.
There are three broad access and delivery technologies - wireless, metallic cable and fiber optic
cable. Wireless continues to grow as the number of wireless devices is expected to surpass wired
devices in 2016. The growth in wireless is dominated by cellular technology. Metallic cable
represents the largest installed telecommunications technology. Metallic cable ranges from plain old
telephone system (POTS) twisted pair to coaxial cable. Both technologies continue to move forward
in bandwidth capacity. Fiber optic cable currently provides the backbone (backhaul) capacity for the
other technologies. As costs have come down and bandwidth demand continues to go up, fiber is the
future proof technology in telecommunications (backhaul, middle mile and last mile). AFN expects
these broad trends to continue.
History Vil
Ashland was a first mover in bringing telecommunications services to the City of Ashland (internet).
The City of Ashland's Electric Department developed its proposal for creating Ashland Fiber
Network in the late-1990s. The proposal responded to the regulatory, market, and public
environments of the period. Communications technology and everything internet were growing
exponentially, stock markets were at historically high levels, capital markets were flush with low-
interest money, the Federal government prioritized competitive telecommunications services through
the Federal Telecommunications Act of 1996, and the deregulation of energy markets created an
Page 7 of 43 Printed: 09/26/2014
unknown future for public electric utility providers. Ashland Electric Department saw the creation of
AFN as an opportunity for the City to create a telecommunications utility to meet demand for
communications services in Ashland and diversify/strengthen the City's electric business.
Ashland's City Council approved the Electric Department's plan to build a fiber optic
communications ring in February 1997 and the City's AFN Implementation Team was formed. The
AFN business plan was presented by the Electric Department to Ashland's City Council in late-1998
and was approved by Council. That plan intended for Ashland Fiber Network to be self-supporting
through revenues, with initial construction debt repaid by operating revenues within a ten-year
period.
The AFN project experienced financial problems quickly after launch. Construction costs far
exceeded estimates and the envisioned system build out was curtailed. Charter Communications
purchased TO and rebuilt the TO network in Ashland creating a strong competitive alternative.
Active price competition ensued. The telecommunications utility failed to generate positive net
revenues as planned. A pivotal moment for Ashland Fiber Network came in 2004, when the City of
Ashland determined that AFN would not be able to pay its business and intra-fund loans. Bonds for
15.5 million dollars were issued to consolidate AFN-related debt and to provide a measure of
financial stability.
AFN continued to struggle to define its business and identity over the ensuing years. Multiple
directors (five in seven years) brought their strategy, focus, and organizational structure to bear in an
attempt to make AFN viable. Activities included investing in unsuccessful services, contracting out
the operation of AFN's cable TV business, separating AFN from Ashland's Electric Department,
blending mutually beneficial resources between AFN and the City Computer Services Division and
refocusing AFN on providing Ethernet and internet services. The lack of consistent, successful,
long-term direction created brand issues and market confusion providing the competition with the
momentum to gain market share. The events led to worsening financial performance by the division.
In FY2013 - FY2014 AFN reinvested in technologies to bring the AFN cable network back to a
state of competitive technology. This effort allowed AFN to provide services on par with the
competition. In FY2013 technologies were added to increase both reliability and performance
capacity for the network. In FY2014 an engineering review of the network and follow-on projects
further increased reliability. In FY2014 new node groups were created and all groups were
rebalanced to provide better reliability, better response and improved services.
Moving forward, lacking significant change in how AFN addresses the market and competition,
AFN will continue to ebb downward. In addition, lacking investment in successful new services,
AFN will not survive the inevitable evolution from metallic cable based services to fiber based
services.
Core Competencies/Strengths
AFN has the experience, infrastructure and service mix to provide and compete for the
telecommunications services needed within Ashland. Customer service (local, friendly, and
competent) combined with citizen penchant for community centric economics (recycling local
Page 8 of 43 Printed: 09/26/2014
dollars within the community) strengthen AFN's position vis-a-vis the competition. Additionally,
the existing infrastructure represents a barrier to entry for any new competitors.
Challenges
AFN has been inconsistent and unsuccessful in new service development. AFN must design new
services not only to meet the needs of the customers but to take momentum away from the
competition. AFN's confusing service offerings together with confusion caused by the distribution
channel has produced a vague and confused image which, when coupled with constrained marketing
efforts, has led to market share loss. AFN must become the company that is known by its solutions
and ease of doing business.
Investment is needed to lower variable product costs (internet) and significantly increase the
competitiveness of the internet product set. Additional investment in a targeted fiber based roll-out
will provide a service not available from the competition. The targeted investment will put AFN in a
product leadership position. The fiber services investment will provide Ashland businesses with the
reliability required to leverage Cloud Services and the World Wide Web.
AFN is at a crossroads; shall AFN continue as a shadow provider or become an active competitor of
Charter Communications/Comcast? AFN must pick an identity, a mode of operation. AFN must then
be empowered to pursue the strategies and tactics necessary to gain success. AFN can be a
successful competitor in its traditional residential market if cost structures and distribution channels
are improved. AFN can serve emerging demand with new fiber based products if capital hurdles can
be overcome. AFN can become a self-sustaining City enterprise if fixed costs are reduced to free up
future investment capital.
Risk exists. If competition should decide to build fiber to compete with AFN, it is unlikely AFN
could compete on a citywide scale. While this would lead to decreased revenues for AFN, it would
accomplish the goal of having a fiber network in Ashland to enhance connectivity and enable
economic growth.
The Long Term
AFN has a narrowing opportunity to be a provider of key telecommunication services to the Ashland
Community. AFN has the opportunity to see growth beginning in FY2017. The growth requires
capital investment and an agile, competitive AFN. To compete, AFN must operate as an efficient
telecommunications provider focusing on services and revenue. AFN must change its focus from
products to markets and provide solutions to the targeted market segments: residential,
commercial/industrial, government/educational, health care and ISP/CLEC. If focused on services
and the needs of these markets, AFN can be successful.
Page 9 of 43 Printed: 09/26/2014
Competitive Disadvantages
AFN has these competitive disadvantages:
• Product Cost Structure: AFN's cost of internet service is currently significantly higher than our
competitors. The cost structure makes it difficult to compete with a national carrier on a price
basis (service and promotions).
• High Fixed Costs: Fixed costs of labor, central service allocations and debt service account for
a significant portion of operating costs.
• Distribution channels/Market confusion: Some agency issues with channel products and
services. Confusion with end customers over who is the provider and who is responsible for
support. No clear service or customer care brand.
• Competitor: Competitor is well-funded, has national (international) buying power and has
active and aggressive marketing campaigns.
• Government Transparency: The strategies, plans and outcomes of AFN are in the public
domain. The strategies and plans are laid bare to the competitor who then has perfect
knowledge and can plan and implement counter strategies to ensure their competitive success.
Pricing
Pricing for the residential, small commercial, small industrial and small health care is set primarily
by the competitive market. While the products serving these market segments are commodities,
differentiation is possible thru good customer service. Pricing for larger commercial, industrial and
health care segments are a combination of market and the customer's value proposition. Pricing for
government and education market segments is set through a standardized bidding process. The price
point is usually close to the cost of providing services.
AFN operates in a competitive market. AFN must set its pricing appropriately; high enough to cover
expenses and fund capital investment and low enough to garner sales.
Marketing Plan
Economics
"The telecommunications industry is in a state of continuous technological and economic flux driven
by intense competition and new technologies""." The development of new Information Technologies
such as Cloud Services, video services (IPTV, OTT), Information and Communications Technology
(ICT) and social communication services (Facebook, Twitter, etc.), is quickly increasing the demand
for telecommunication services. The expanding use of telecommunications services also requires
higher performance and reliability levels from the telecommunications layer in order to deliver the
new technologies.
Government, large businesses and large health care providers have recognized the value of these
services and have moved to gain their benefit. The small and middle tiers of these markets are now
beginning to see the justification for their use. The enabling piece is connectivity. The key to the
connectivity is performance and reliability. To be successful AFN needs to ensure the network is
Page 15 of 43 Printed: 09/26/2014
positioned to meet these requirements. AFN's cost structure (variable and fixed) must be addressed
in order for AFN to continue to enhance the performance of the network. In addition, AFN should
increase reliability by investing in fiber based last mile technologies.
The Telecommunications industry is highly competitive. The Ashland market is dominated by
Charter Communications, a national Multi-System Operator (MSO). Charter has a better cost
structure due to buying power and bankruptcy reorganization in 2009. Charter is anticipated to swap
the Ashland market with Comcast. Comcast is also a national MSO. Comcast also benefits from its
buying power. Comcast is consistently ranked below average on customer satisfaction and actively
works to abolish net neutrality. Both these positions provide a good contrast to the AFN customer
care reputation.
AFN services the Ashland telecommunications market. The Ashland Telecommunications Market
value is estimated to be 6.5 million dollars. The following chart presents the relative position of
AFN in the market in total and for each of the identified market segments. AFN numbers include
services provided to ISPs.
Figure 1 - AFN Market Share vs. Market Size
AFN Market Share vs. Market Size
7
6
C
O
5
4
3
■ AFN Share
2 s Market Size
1
0
Residential Corn/Indus Gov/Educ Health Collo Total
■AFN Share 1,172,513 305,325 179,712 172,800 6,000 1,836,350
■ Market Size 3,908,376 2,035,500 187,200 216,000 150,000 6,497,076
Data: 06/30/2014
Page 16 of 43 Printed: 09/26/2014
The relative market share for the market participants is presented in the pie chart below. AFN has
approximately twenty-eight percent of the Ashland telecommunications market. AFN numbers
include services provided to ISPs.
Figure 2 - Market Share of Market Participants (Revenue
Market Share
Charter
62% ■ AFN
C ntryLnl< ■ Charter
Other
■ CenturyLink
10% 7%
■ Other - Rgnal
AFN ■ Other - Sttwid
28%
Data: 06/30/2014
The share of each market served by the active market participants is presented in the chart below.
AFN numbers include services provided to ISPs.
Competitive Position in Market
7
6
N
0 5
4 ■ Residential
3
2 ■ Corn/Indus
1 Gov/Educ
0 ■ Health
■ C0110
Le ~~r Office
Data: 06/30/2014
Page 17 of 43 Printed: 09/26/2014
Demand
The chart below illustrates the utilization of various internet access technologies for the past five
years. The demand for both wired and wireless internet connectivity continues to grow. The City of
Ashland's utilization is expected to follow national trends. Significantly, AFN provides two of the
three fast growing connection technologies (cable modem, fiber) and has the potential for a
leadership position in fiber.
Table 1- Trends in Connectiviryx ii
At Least 3Mbps Downstream and 768Mbps Upstream by Technology (thousands)
2009 2010 2011 2012 2013
Technology Jun Jun Jun Jun Jun
aDSL 5,614 6,275 8,909 12,875 16,029
sDSL 9 13 16 30 34
Other Wireline 129 177 204 239 289
Cable Modem 23,958 30,616 34,113 37,798 46,014
Fiber 3,333 4,192 5,188 6,001 6,989
Satellite - - 1 87 791
Fixed Wireless 64 92 145 214 337
Mobile Wireless 224 4,188 16,242 43 025 93,247
Total 33,331 45,553 64,818 100,269 163,730
Table 2 - Bandwidth Growth (Fiscal Year End)
Year Bandwidth (Mbps) AFN's demand for internet services continues to grow. The chart at
2006 100 left shows the bandwidth growth over successive four year periods.
2010 300 Demand is expected to grow three fold over the next four years.
2014 1500
2018 4500
Trends
The Telecommunications Industry continues to change. The emergence of fast, reliable cellular
services has led to the decline of the triple play with cellular supplanting home based VoIPx' The
emergence of new technologies, IPTV/OOT coupled with smart TVs (and standalone devices) is
pressuring traditional video (broadcast and cable) providers. The "internet of everything" is
demanding high performance and high reliability form consumers. The telecommunication industry
is moving quickly to IP based services. IP services continue to grow, broadband subscriptions grew
one percentx° in 2013, and traditional cable customers shrank by two percentx°i In the same
timeframe, for the first time ever, total broadband subscriptions outnumbered total cable
subscriptions. The direction for technologies, customers and telecommunications is to IP (internet)
based services.
Page 18 of 43 Printed: 09/26/2014
AFN has the potential for growth in the commercial/industrial, health care market segments and
slow growth in the residential market segment. The commercial/industrial and health care market
segments will require the introduction of an affordable fiber solution. The addition of a lower cost
fiber based service allows these customers to move up to a faster, better performing and more
reliable product set.
Barriers to Entry
The high capital cost to construct a fiber and coaxial plant makes AFN's investment in
telecommunications infrastructure (twenty five miles of fiber, one hundred nineteen miles of coaxial
cable) a significant barrier of entry for any new competitors. The existing competitor is believed to
have less fiber and an equivalent amount of coaxial cable in the area, though the exact amount is not
known.
External Factors
Technology: Cloud technology is shaping demand for fast and reliable internet connectivity. The
rapid adoption of Cloud (and Software/Platform/Infrastructure/ "as a service") model of
Information Technology provides opportunities. The growing push to replace coaxial with fiber
represents a significant risk if AFN does not begin to similar evolution. While coaxial and
wireless (esp. cellular) continue to move forward in capabilities, fiber continues to provide the
most robust, future proof technology. The commercialization of Passive Optical Networking
(PON) makes it possible to serve small commercial/industrial/medical customers economically
with fiber services. An example of the growth in this technology is Google Fiber.
Regulation: While not actively being pursued in Oregon, MSOs have pursued legislation in other
states to prohibit or curtail municipal telecommunication networks. If Oregon were to pass such
legislation, AFNs future prospects could be reduced or extinguished.
Economy: Economic swings affect expansion of services, but have little effect on the contraction of
services. During times of economic distress residential customers look to internet connectivity
for entertainment while commercial, industrial and healthcare look for additional efficiencies
through internet use. During growth periods demand for internet grows, during economic
downturns the demand for internet access does not significantly shrink.
Industry: The industry continues to experience consolidation (Comcast/Time Warner). The benefits
of scale provide significant leverage for cost reductions (internet, programming, operations).
AFN does not enjoy the same scale of cost savings.
Page 19 of 43 Printed: 09/26/2014
regulatory approval. While Comcast has not shown a disposition to put fiber infrastructure into
communities the size of Ashland, if Comcast does build fiber infrastructure in Ashland, Comcast
would be a formidable competitor.
Competitive Analysis
Table 3 - Competitive Analysis - AFN Internal Analysis of Strengths and Weaknesses, Competitive Comparison
Factor AFN Strength Weakness Charter Centuryl-ink Importance'
Products Good Good Poor 1
Performance Average Average Average 1-2
Reliability Average Average Average 1-2
Quality Good Good Good 1-2
Price Moderate Low High 2-4
Service Good Poor Poor 1-4
Selection Good Average Poor 1-2
Stability Average Good Good 1-2
Expertise Average Average Average 1
Reputation Below Average Poor Below Average 1-3
Location Poor Non-Existent Non-existent 4
Sales Poor Good Poor 1-4
method
Advertising Poor Average Average 2-5
Image Average Below Averag Unknown 2
Charter is the active competitor in Ashland. Charter is often first to market and has consistently
demonstrated aggressive promotion and pricing. The pending territory swap presents a window of
opportunity while Charter pauses for merger activity and Comcast focuses on operational integration.
t 1= critical; 5 = not very important
Page 23 of 43 Printed: 09/26/2014
AFN will continue to improve the performance and reliability of the services and work the
performance, reliability and price attributes into strengths. The combination of competitor
distraction, products, performance, reliability, and customer service present an opportunity to gain
market share.
Niche
AFN provides telecommunication connectivity to residents and businesses of Ashland. Connectivity
is provided via the delivery of Ethernet and internet services. The services are provided via cable,
fiber and wireless technologies.
Marketing Strategy
AFN provides services for customer telecommunication connectivity. AFN competes with the
incumbent national service provider using similar technologies; however, AFN's services are
targeted at the need of the local market segments. Differentiation is accomplished through service
unique attributes, customer service, performance, reliability, and a "support local" preference within
the community.
AFN will market to the incumbent provider customer base to gain market share. AFN will focus on
the commercial/industrial and health care segments. The new fiber based services will be trialed in
the current AFN customer base and then offered to the ISPs and marketed to the incumbent's
customer base.
AFN will continue to use direct and wholesale channel distribution (ISPs) to sell to and support the
customer base. For AFN direct customers, AFN provides all customer facing activities and maintains
the delivery of services to the end customer. For ISP customers, the ISP provides all customer facing
activities and AFN maintains the delivery of services to the end customer.
Promotion: AFN will use direct marketing, mail and email lists to contact and market to the
incumbent's customer base. Participation at local events will be trialed for effectiveness. Depending
on size and projected service usage, businesses may be contacted directly. While pricing is not
generally used for promotion, pricing may be used to overcome customer resistance to switching
(switching costs). AFN will explore ways to participate with ISPs in promotions.
Advertising: To this point advertising has been limited and brand oriented. Regular advertising will
be tracked and audited to determine where and how often service advertisements will be used. The
effectiveness will be monitored.
Promotional Budget: AFN's current promotional budget is twenty-six thousand dollars. The
majority of the budget goes to image advertising. The budget will be increased to approximately
forty thousand dollars to support service oriented sales initiatives (gaining market share from
incumbent).
Page 24 of 43 Printed: 09/26/2014
Pricing: Pricing for the largest segment (AFN direct and ISP residential customers) is set by the
competitive environment. The price elasticity is high (higher price lower demand). Service
performance, reliability, and customer care can be effective in customer retention.
Pricing for other market segments is value based.
Distribution (Placement)
AFN utilizes two sales channels to reach customers:
Retail sales (aka AFN Direct): AFN is the owner of the customer and responsible for all facets of the
sales, installation, support, and administrative (i.e. billing) functions. AFN retail also promotes the
other distribution channel (ISPs), and allows the customer to choose with whom they wish to do
business.
AFN must become the company that is known by its solutions and ease of doing business. AFN
will clear impediments and provide a distribution system where the customer can make AFN the
easy choice for the services they need. AFN must be easier to do business with than the
competition. AFN should reinstitute a point of sale at the initial point of contact in City Hall. AFN
should work to understand and eliminate the logistical and procedural barriers in order to make
AFN a welcomed conversation in customer interaction. In order to provide for additional customer
convenience, the web based self-registration should be reinstated.
Internet Service Providers (ISP): The ISPs are independent third parties who have agreements for the
purchase and resale of AFN services. AFN contracts with five ISPs. AFN provides delivery and
services to the ISP at a discounted rate. The ISP is responsible for acquiring, supporting and billing
the customer. Two of the ISPs are located in Ashland. One of the ISPs has a store front in Ashland.
Three of the ISPs provide customer support with in-house staff, two of the ISPs use a third party
customer support service. Three of the ISPs sell competitor's products.
AFN serves a broad spectrum of customers. Internet Service Providers (ISP) are the largest
customer group. ISPs act as a distribution channel for the resale to the residential,
commercial/industrial, and health care market segments. AFN also addresses these market
segments. Both AFN and ISPs need to focus their efforts on success against the competition. The
ISP group provides value added services (TV, phone) and many sell competing internet and
Ethernet products from Charter and CenturyLink.
Page 25 of 43 Printed: 09/26/2014
The chart below shows the customer counts and five year change for each of the ISPs and AFN.
Table 4 - Customer Counts by ISP
Customer Counts - Five Year History
July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 July 1, 2014 5 Yr Delta#
Ashland Home Network 2,159 2,938 2,768 2,596 2,514 (424)
AFN 107 176 316 453 520 413
Jeffnet 723 643 584 515 459 (264)
Computer Country 252 254 249 212 208 (44)
Infostructure 957 220 204 186 182 (38)
Hunter 2 4 3 6 9 7
4,200 4,235 4,124 3,968 3,892 (350)
Notes: Ashland Home Network acquired approx. seven hundred Infostructure customers
#Ashland Home Network and Infrostructure are 4 year delta
The AFN direct sales have proven effective in making significant gains (up three-hundred eighty-six
percent in five years).
The ISP channel has been challenged. With the exception of Hunter the ISPs have lost seven-
hundred seventy customers during the five year period. The causes are likely: a) competition for
cable TV (channel selection and features), b) services (performance) late to market, and c) limited
marketing efforts and the representation of alternative services.
AFN's direct efforts have proven effective; this channel should be allowed to freely compete against
the larger incumbent. The message delivered to potential customers must be clear and unambiguous.
AFN is the Ethernet and internet alternative to the competition. Where there is a mutual advantage
for AFN to support the ISPs efforts, AFN and the ISP will leverage our relationship. However, AFN
can no longer stand in the background but rather must openly and actively drive to gain market share
against the larger incumbent.
Page 26 of 43 Printed: 09/26/2014
Sales Forecast
Fiber Service to the Premise (new)
Fiber to the premise (FTTx) is a natural and anticipated extension of the AFN network. The AFN
network has a core fiber network (twenty-five miles) serving the City. Historically only the
customers with the budgets to construct and pay for dedicated fiber connections have been able to
take direct advantage of AFN's fiber network. New (to Ashland) technology now makes fiber
affordable to the small/medium business/enterprise. The project brings fiber from the ring to the
customer premise. The initial area targeted for installation is a commercial area currently being
served by AFN. Existing customers have expressed a need for the features fiber can provide - high
performance and high reliability. The underlying technology for this proposal is Passive Optical
Networking (PON).
AFN has a real opportunity. The need and demand are there. The technology and supporting
technologies are there. Additionally, a confluence of factors may distract the competition and
provide AFN the opportunity to develop unmatched services and capture market share. Delaying
the project will likely close the opportunity vis-a-vis the competition.
This project is contingent upon meeting key assumptions. Without meeting or mitigating these
assumptions the project should not go forward. The assumptions are outlined in the following
tables.
Page 27 of 43 Printed: 09/26/2014
Revenue
Outcomes are dependent upon the assumptions noted below and in following forecast Revenue and
Expenses Tables.
The assumptions for Revenue/Sales are:
• The new service revenues begin in FY2017 (September 2016)
• Revenues ramp up slowly over an eighteen month period to reach a maximum of sixty-five
connections. It is reasonable to expect the number of connections to keep growing, but for
purposes of conservatism, the numbers are held to these levels.
The first twelve months sales projections for the new fiber based services (Quantum 50 and 100)
are shown in the table below. These numbers are conservative, minimum expected sales.
Twelve Month Sales Forecast - Quantum Service
6/16 7/16 8/16 9/16 10/16 11/16 12/16 1/17 2/17 3/17 4/17 5/17 Total
Quantum 50 1 6 9 11 13 18 25 28 33 144
Sale Price/unit 85 85 85 85 85 85 85 85 85 85 85 85
Quantum 50Total - 85 510 765 935 1,105 1,530 2,125 2,380 2,805 12,240
Quantum 100 1 2 2 3 3 4 4 5 24
Price 110 110 110 110 110 110 110 110 110 110 110 110
Qua ntu m 100 Tota I - 110 220 220 330 330 440 440 550 2,640
14,880
The above table indicates a go live launch date in September, 2016. Following the launch, sales
ramp up slowly as AFN refines installation and support techniques. After the first six months, sales
ramp up more quickly and by month eighteen level off at about sixty-five customers for the
Quantum 50 service and continue to grow slowly for the Quantum 100 service for the remainder of
the projection (please see the next table - Five Year Sales Forecast - Quantum Service). This
forecast is based on specific cluster of AFN commercial customers who have expressed the real
need for a fiber based product.
Page 28 of 43 Printed: 09/26/2014
Five Year Sales Forecast Quantum Service (realistic}
FY2017 FY2018 FY2019 FY2020 FY2021 5 Year Total
Quantum 50 avg 121mo avg 50/mo avg 62/mo avg 65/mo avg 65/mo
Sale Price/unit 85 85 85 85 85
Quantum 50 Total 12,240 51,000 63,240 66,300 66,300 $ 259,080
Quantum 100 avg 2/mo avg 6/mo avg 8/mo avg 10/mo avg 12/mo
Price 110 110 110 110 110
Quantum 100Total 21640 7,920 10,560 13,200 15,840 $ 50,160
Total 14,880 58,920 73,800 79,500 82,140 309,240
The additional fiber based service is projected to add $309,520 to AFN's revenue over the five year
period. As success and revenue allow, the service can be deployed into other commercial/industrial
locations. Ultimately this service can provide fiber to the premise where ever revenue allows.
The effect on AFN net Revenue projections is illustrated in the Revenue table below. Please note
only FY2017 and FY2018 projections appear in the table below
Revenue
FY2014 FY2015 FY2016 FY2017 FY2018 Tota I
High-Speed (fiber based) 199,419 204,404 209,514 229,632 279,041 1,122,010
Internet Service 1,630,416 1,630,416 1,711,936 1,797,533 1,887,410 8,657,711
Ca bl e 99,003 85,018 85,018 85,018 85,018 439,075
Other - - - - - -
Total Revenue 1,928,837 1,919,838 2,006,469 2,112,183 2,251,469 10,218,796
Notes:
Year FY2014 actual s
YearFY2015 budget
Years FY2016-2018 are projections
Revenue from PON starting in FY2017
The new revenue appears only in FY2017 and FY2018, remaing projected revenues (FY2019-FY2021) do not appear in this table
Page 29 of 43 Printed: 09/26/2014
Expenses
The effect of the Quantum services on AFN expense projections is illustrated in the table below.
The assumptions for Expenses are:
• Current budgeted capital investments are reduced in FY2016 -FY2018 to cushion the
impact of the PON ($250k) and FY2016 internet ($250k) capital projects
o FY2016 $190k down to $50k
o FY2017 $126k down to $50k
o FY2018 $105k down to $50k
• A cost reduction of $200k in fixed costs in FY2016 - FY2018
• Capital investment of $250k for internet capacity in FY2016
• Capital investment of $250k for PON technology in FY2017
Expenses
FY2014 FY2015 FY2016 FY2017 FY2018 Total
Personnel 648,083 651,600 677,700 704,800 733,000 3,415,183
Operating 881,960 930,402 758,314 787,063 816,675 4,174,414
Debt 409,000 409,000 409,000 409,000 409,000 2,045,000
Capital 103,235 115,000 300,000 300,000 50,000 868,235
Total Expenses` 2,042,278 2,106,002 2,145,014 2,200,863 2,008,675 , 10,502,832
Notes:
Year FY2014 actual s
Year FY2015 budget
Years FY2016-2018 are projections
Original Budget Capital Investments reduced in FY16-18
$200,000 Cost Reduction in FY16-18
Capital Investment in internetin FY2016
Capital Investment in PON in FY2017
The difference between Revenue and Expenses is presented below as net income.
Net Income (113,441) (186,164) (138,545) (88,680) 242,794 (284,036)
Project financial analysis:
Payback Period 4.3 years
Net Present Value (6% discount;
timed from project launch) $19,096
The fiber based Quantum services (PON technology) are recommended and provide a positive return
to both the community and AFN. However, there are significant assumptions for the
modification/relief of some current expense areas (fixed costs). If these assumptions cannot be met
or otherwise mitigated the project should not go forward.
Page 30 of 43 Printed: 09/26/2014
Financial Performance and Forecast
Performance
AFN's financial performance remains below breakeven. The aggressive marketing by the
competition, the delayed system upgrades to match competitive services, the lack of new products,
and the declining performance in the distribution channels have led to a loss of customers and their
associated revenue. While AFN works to bolster income in the traditional business (cable, internet)
through more aggressive marketing (ISP and Retail), the outlook is to continue the trend through
FY2016. In FY2017, with the help of capital projects and anticipated marketing efforts, the division
begins to rise above breakeven. While a new family of services is described in the strategic plan, the
financial hurtles for implementation may make the project untenable. Moving forward, the
continued lack of new products puts the division in a precarious competitive position five to six
years in the future.
The chart below shows the Historical financial performance for AFN.
Figure 3 - Historical Financial Performance
AFN Histroical Performance
2,500
2,000
1,500 Total Revenues
1,000 Total Expenditures
0 Fund Ending Balance
=
t
500 Excess
(500)
2010 2011 2012 2013 2014
Note: Excess = Revenue - Expenditures
Page 31 of 43 Printed: 09/26/2014
The following chart illustrates the historical trends within the division's revenue by line of business.
Figure 4 - Revenue by Line of Business
AFN Revenue by Line of Business
2,500
2,000
- - - - -
1,500
c
ca
CAN
s 1,000 t .
High Speed
Internet
500 Total
2009 2010 2011 2012 2013 2014 2015 bgt
CAN 126,862 109,596 158,523 82,786 105,560 99,003 85,018
High Speed 192,114 195,506 193,378 190,219 186,586 199,419 231,231
Internet 1,486,76 1,512,64 1,592,85 1,658,12 1,603,96 1,630,41 1,690,63
-Total 1,805,74 1,817,74 1,944,75 1,931,12 1,896,10 1,928,83 2,006,88
Note: Change in CAN revenue in 2012 is a result of contract renegotiation in April, 2012
Page 32 of 43 Printed: 09/26/2014
Forecast
The following two charts show the four year projections for net revenue and expenses for the
division. It is important to note there are no new services in these projections. However, there is a
two-hundred fifty thousand dollar investment to increase internet capacity in FY2016. The
investment is required to meet projected demand for internet by new and current customers. The
internet capacity is required to continue to provide internet as a service (eighty-five percent of
revenue in FY2014). The internet project is designed to provide for the increasing bandwidth
utilization by our customers and forestall unsustainable pricing from the current supply chain.
The following table presents the Revenue projections through FY2018. These projections are based
on an expected growth in both the High-Speed and Internet service. This growth is based on a
change to more active marketing, and leveraging AFN's local customer support advantage. 'Alok
Revenue
FY2014 FY2015 FY2016 FY2017 FY2018 Total
High-Speed (fiber based) 199,419 204,404 209,514 214,752 220,121 1,048,210
Internet Service 1,630,416 1,630,416 1,711,936 1,797,533 1,887,410 8,657,711
Cable 99,003 85,018 85,018 85,018 85,018 439,075
Other - - - -
Total Revenue 1,928,837 1,919,838 2,006,469 2,097,303 2,192,549 10,144,996
Notes:
Year FY2014 actuals
s
YearFY2015 budget j
Years FY2016-2018are projections
NO Revenue from PON i
Page 33 of 43 Printed: 09126/2014
The assumptions for Expenses are:
• Current Budgeted capital investments are reduced in FY2016 -FY2018 to cushion the
impact of the FY2016 internet ($250k) capital project
o FY2016 $190k down to $50k
o FY2017 $126k down to $50k
o FY2018 $105k down to $50k
• A cost reduction of $150k in fixed costs in FY2016 - FY2018 (central services, debt, etc.)
• Capital investment of $250k for internet capacity in FY2016
Expenses
FY2014 FY2015 FY2016 FY2017 FY2018 Total
Personnel 648,083 651,600 677,700 704,800 733,000 3,415,183
Operating 881,960 930,402 808,314 837,063 866,675 4,324,414
Debt 409,000 409,000 409,000 409,000 409,000 2,045,000
Capital 103,235 115,000 300,000 50,000 50,000 618,235
Total Expenses 2,042,278 2,106,002 2,195,014 2,000,863 2,058,675 10,402,832
Notes:
Year FY2014 a ctua I s
Year FY2015 budget
Years FY2016-2018 are projections
Original Budget Capital Investments reduced in FY16-18
$150,000 Cost Reduction in FY16-18 3
Capital Investment in internetin FY2016
NO Invesment in PON
Net Income (113,441) (186,164) (188,545) 96,440 133,874 (257,836)
i
Page 34 of 43 Printed: 09/26/2014
The following charts represent analysis of AFN's Expenditures. The first chart shows historical
expenditures and the second chart presents the FY2014 actual expenditures.
Figure 5 - AFN Expenditure Analysis, Historical
AFN Expenditure Analysis
2,500 -
2,000 ■ Personnel
■ Central Services
1,500
c 0 Debt Contribution
0 1,000 ■ Other Materials and Services
s
■ Internet
500
Capital Outlay
09290
WIM IN t
2010 2011 2012 2013 2014
Figure 6 - AFN Expenditure Analysis, 2014
AFN 2014 Expenditure Analysis
5%
rr
13% d `
31% ■ Personnel
■ Central Services
o " p Debt Contribution
11%
x
■ Other Materials and Services
■ Internet
Capital Outlay
20% 20%
The two charts above present where AFN uses its resources. In FY2014, Personnel, Central
Services and Debt Contribution represent seventy-one percent of AFN's expenditures. Combined
with the thirteen percent required for Internet, eighty-four percent of expenditures are fixed.
Page 35 of 43 Printed: 09/26/2014
Appendix A - AFN Services Analysis - Count and Revenue
Figure 7 AFN Services Analysis - Count and Revenue
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Page 36 of 43 Printed: 09/26/2014
Appendix B - AFN Channel Analysis - Services Distribution by ISP
Figure 8 Channel Analysis - Services Distribution by ISP
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Page 37 of 43 Printed: 09/26/2014
Appendix C-Current AFN Rates Structure
The following chart is AFN's current flat wholesale rate structure, implemented in January
2011.
AFN Fiber Network Products
Community Access (No longer promoted)
Email Activity Dial Up Alternative
Up to 256 Kbps Download / 256 Kbps Upload
$9 month Wholesale
$9 month AFN Direct Retail
Basic (No longer promoted)
DSL Alternative for Moderate Internet Users
Up to 1.5 Mbps Download/ 256 Kbps Upload
$25 month Wholesale
$30 month AFN Direct Retail
Choice
The Most Popular Internet service
With 200 GB/month bandwidth usage
Up to 5 Mbps Download/ 1 Mbps Upload
$28 month Wholesale
$35 month AFN Direct Retail
Preferred
General Media Applications
With 2S0 GB/month bandwidth usage
Up to 15 Mbps Download/ 3 Mbps Upload
$38 month Wholesale
$45 month AFN Direct Retail
Preferred Plus
For Web-based TV and Movie Viewing
With 300 GB/month bandwidth usage
Up to 15 Mbps Download/ 3 Mbps Upload
$45 month Wholesale
$55 month AFN Direct Retail
Page 38 of 43 Printed: 09/26/2014
Appendix C-Current AFN Rates Structure (continued)
Media
Online Gaming and General Media Applications
With 300 GB/month bandwidth usage
Up to 20 Mbps Download/ 5 Mbps Upload
$55 month Wholesale
$65 month AFN Direct Retail
Media Plus
Premium Residential Services
With 350 GB/month bandwidth usage
Up to 20 Mbps Download/ 5 Mbps Upload
$65 month Wholesale
$75 month AFN Direct Retail
Home Office
For Home Office Applications Enabling Fast Two-Way File Transfers
With 350 GB/month bandwidth usage
Up to 10 Mbps Download/ 3 Mbps Upload
$53 month Wholesale
$65 month AFN Direct Retail
Small Business
With 500 GB/month bandwidth usage
Up to 25 Mbps Download/ 5 Mbps Upload
$73 month Wholesale
$85 month AFN Direct Retail
Small Business Enhanced
With 500 GB/month bandwidth usage
Up to 25 Mbps Download/ 10 Mbps Upload
(Not Available Wholesale)
$100 month AFN Direct Retail
AFN MAX Home PROMO
Implemented June 23, 2014
Charter Alternative
With 500 GB/month bandwidth usage
Up to 30 Mbps Download/ 5 Mbps Upload
$45 month Wholesale
$55 month AFN Direct Retail
Page 39 of 43 Printed: 09/2612014
Appendix D-Proposed AFN Rates Structure
The following chart is AFN's proposed rate structure to be updated with partner input to
implement in the near future.
AFN Fiber Network Products
Internet Essential
Low Income Connectivity Assistance
With 100 GB/month bandwidth usage
Up to 5 Mbps Download / 1 Mbps Upload
$9 month Wholesale
$9 month AFN Direct Retail
Choice
Our Most Popular Internet service
With 200 GB/month bandwidth usage
Up to 7 Mbps Download / 1 Mbps Upload
$29 month Wholesale
$35 month AFN Direct Retail
Preferred
General Media Applications
With 300 GB/month bandwidth usage
Up to 15 Mbps Download/ 3 Mbps Upload
$39 month Wholesale
$45 month AFN Direct Retail
Max Home
Online Gaming and General Media Applications
With 350 GB/month bandwidth usage
Up to 30 Mbps Download/ 5 Mbps Upload
$45 month Wholesale
$55 month AFN Direct Retail
Enterprise
Home Office and Small Office Connectivity
With 500 GB/month bandwidth usage
Up to 50 Mbps Download/ 5 Mbps Upload
$80 month Wholesale
$85 month AFN Direct Retail
Page 40 of 43 Printed: 09/26/2014
Tables and Figures
Table 1 - Trends in Connectivity ..........................................................................................................................18
Table 2 - Bandwidth Growth (Fiscal Year End) ..............................................................................................18
Table 3 - Competitive Analysis - AFN Internal Analysis of Strengths and Weaknesses,
Competitive Comparison .....................................................................................................................23
Table 4 - Customer Counts by ISP .......................................................................................................................26
Figure 1 - AFN Market Share vs. Market Size ..................................................................................................16
Figure 2 - Market Share of Market Participants (Revenue ...................................................................17
Figure 3 - Historical Financial Performance ....................................................................................................31
Figure 4 - Revenue by Line of Business .............................................................................................................32
Figure 5 - AFN Expenditure Analysis, Historical ............................................................................................35
Figure 6 - AFN Expenditure Analysis, 2014 .....................................................................................................35
Figure 7 - AFN Services Analysis - Count and Revenue ......................................................................36
Figure 8 - Channel Analysis - Services Distribution by ISP ........................................................................37
Page 41 of 43 Printed: 09/26/2014
Endnotes
Distribution Channel - distribution channel (aka marketing channel) provides for the delivery of products and
services to the end-user or consumer either directly (direct channel) or through intermediaries.
Point-of-Presence - location where telecommunication providers offer a connection point to their network and
services. The major regional Points-of-Presence are located in: Portland, Seattle, and San Francisco.
"last mile" - denotes the final connectivity leg between the telecommunications provider and the final customer
or consumer.
iv Cloud Based Service - generally described as one of the following services.
Software as a Service (SaaS). The capability provided to the consumer is to use the provider's applications running
on a cloud infrastructure. The applications are accessible from various client devices through either a thin client
interface, such as a web browser (e.g., web-based email), or a program interface. The consumer does not manage
or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even
individual application capabilities, with the possible exception of limited user-specific application configuration
settings.
Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure
consumer-created or acquired applications created using programming languages, libraries, services, and tools
supported by the provider. The consumer does not manage or control the underlying cloud infrastructure
including network, servers, operating systems, or storage, but has control over the deployed applications and
possibly configuration settings for the application-hosting environment.
Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage,
networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary
software, which can include operating systems and applications. The consumer does not manage or control the
underlying cloud infrastructure but has control over operating systems, storage, and deployed applications; and
possibly limited control of select networking components (e.g., host firewalls).
v IPTV/OTT:
Internet Protocol TV (IPTV), Transport and delivery of TV programming via a privately controlled internet
protocol network
Over the Top (OTT), Transport and delivery of TV programming via the public internet protocol network
vi ICT - Information and Communication Technologies, the integration of both computing and communications
technologies into consumer goods, "The internet of everything"
vi History - edited and updated from Ashland Fiber Network Strategic Business Plan, page 10, August 2010
viii FTTx: Fiber To The x - refers to all possible optical fiber topologies from a telecom or cable carrier to its
customers, based on the location of the fiber's termination point
FTTH and FTTP (home and premises) the fiber ends inside the home or building
FTTC and FTTN (curb and neighborhood) the fiber ends outside the home or building
ix Press Release, J.D. Power Reports: Customer Satisfaction is High among Internet Customers Who Upgrade to
Premium Speed Offerings To Boost Performance, J.D. Power, McGraw Hill Financial, 26 September 2013
x VLAN: Group of devices on one or more networks that are configured to communicate as if they were attached to
the same wire, when in fact they are located on a number of different network segments
Page 42 of 43 Printed: 09/26/2014
Xi SOHO - Small Office Home Office, small or home office environment and the business culture that surrounds it
Xii Telecommunications Industry Market Research, Introduction to the Telecommunications Industry, Plunkett
Research Limited, Available from: <http://www.p]unkettresearch.comltelecommunications-market-
research/industry-and-business-data>. [9 September 2014]
xill Federal Communications Commission, Statistical Reports, Internet Access Services, 6/14 Release, Local
Telephone Competition and Broadband Deployment, pg. 25, Table 7, Available from:
https://anns.fcc.gov/edocs 12ublic/attachmatch/DOC-327829A1.pdf. [14 July 2014]
xlv VoIP - Voice over Internet Protocol, delivery of voice communications and multimedia sessions over Internet
Protocol (IP) networks
Xv Wired Business, The Internet is Officially More Popular Than Cable in the U.S., Available from: <
http://www.wired.com/2014/08/the-internet-is-now-officially-more-popular-than-cable-in-the-u-s/>, [12
September 2014]
Wi Bloomberg News, TV Subscriptions Fall for First Time as Viewers Cut the Cord, Bloomberg, Available from: <
httl2://www.bloomberg.com/news/-2014-03-19/u-s-pay-tv-subscriptions-fall-for-first-time-as-streaming-
gains.html>, [15 September 2014]
xvii Products:
Internet - Internet is a communications protocol used to ensure quick addressing/routing and error free delivery
of information from source to final destination (especially across multiple networks).
Ethernet - Ethernet is a more tightly focused communications protocol used to connect and identify unique
physical devices within a single network.
Though predating the International Standards Organization's Open Systems Interconnection (OSI) standard model
for communication among devices, Internet and Ethernet do support different layers of the OSI model (see table
below).
(Ethernet - Layer 2; Internet - Layers 3 and 4)
OSI Model Examples
Application Layer
7 Facilitates ccmmuniation bet»} n Web Application
soft-re apli:A- I" Gutlaok IE
Data 6 Presentation Layer HTTP
Data representation and encryptian
5 Session Layer so
Interhoat communicatk-n
Segments q Transport Layer Transmission Control
End to and oonnecb- and reliability Protocol (TCP)
Network Layer
Packets 3 Path determination and kgkal Internet Protocol (lP)
.61-sing
Frames 2 Data Link Layer Ethernet
Mec ervJ LLC - Physical adding
Bits 1 Physical Layer CATS
ledia. sgnal and binary transmisau
Page 43 of 43 Printed: 09/26/2014